To make the curry paste, blend onion, tomato, garlic, ginger, and green chili using water to make a smooth paste. Transfer it to a bowl and set it aside.
Heat oil in a heavy bottom kadhai. Once the oil is hot, add bay leaf and cumin seeds. Saute for 10 - 20 seconds.
Next, add the curry paste, salt, red chili powder, turmeric, and coriander powder. Fry the paste till oil starts separating from the masala. This takes less than 5 minutes on high heat.
Next, add water, kasuri methi, paneer cubes, garam masala, and cream. Stir to combine all the ingredients nicely.
Cover and cook the curry for 5 minutes. This softens the paneer cubes and allows them to absorb the flavor of the curry.
Turn off the heat. Garnish with fresh coriander leaves.
Serve Paneer Curry with roti or rice.